While the housing market remains one of the big unknowns right now, many income investors are wading back into REITs.

According to tax law, real estate investment trusts must give back 90% of their income to investors in order to avoid income taxes, and most companies do this by providing a hefty dividend.

Few REITs, however, can rival the 16% dividend yield of Annaly Capital Management (NLY). That’s right, 16% -- the company is trading at around $18 with an annual payout of $3 a share.

• Get a rundown of the REIT sector, complete with price targets

While that’s the upside for Annaly, the downside is that the stock is shrouded in uncertainty due to its exposure to the kinky mortgage-backed securities that started the mess on Wall Street in late 2008.

Though a REIT, Annaly focuses on paper instead of properties, making its money from investments such as mortgage pass-through certificates, collateralized mortgage obligations and other such instruments.

Since even now it's hard to tell how many "toxic mortgages" remain on the market or whether the real estate market has truly hit bottom, it makes it hard to forecast NLY's future performance.

Perhaps that's why analysts have a wide price range from a low of under $16 to a high of $23. Shares are currently trading right in the middle of those estimates at around $19.

On the plus side, NLY has improved its earnings in each of the last four consecutive quarters -- so it seems a safe bet that the company will keep its dividend intact with a steady stream of cash. But Wall Street hates uncertainty, and not knowing the true state of the housing market makes a mortgage-backed security company like Annaly a risky bet right now.

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